Six Faces in the Race to Pump More Oil

The world is awash in oil. OPEC, in the past, would throttle production to bolster markets. Now, it has opened the spigots. Among the world’s top producers, Russia, Iraq, Canada and China are now pumping flat out, too. Take a look at some of the prominent people behind the boom.

Published June 3, 2015 at 7:00 p.m. ET

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Oil Production
in barrels per day

Break-Even Oil Price
is the per-barrel price required to profitably pump oil over the long term.
The Brent crude price was last updated on

Irkutsk, Russia

Nikolay Buynov on an Irkutsk oil field.
Photo: IRKUTSK OIL COMPANY

Nikolay Buynov

Siberian oil man Nikolay Buynov first heard about the promising oil geology in Russia’s eastern Siberia two decades ago, after a chance meeting with Boris Sinyavsky, a geologist who had explored the region during Soviet times.

‘I want to put east Siberia on the map as an oil producing region,’ says Mr. Buynov.
Photo: VLADIMIR SMIRNOV FOR THE WALL STREET JOURNAL

“He planted the seed in my mind,” Mr. Buynov says now, “to believe in the future of east Siberia oil.” He and his father, Mikhail, teamed up with Mr. Sinyavsky. They founded Irkutsk Oil Co. in 2000, initially focused on three fields deep inside the Siberian taiga, or sub-Arctic forest, some 620 miles north of Irkutsk, an old mining and fur-trading town near Russia’s famous Lake Baikal.

Mr. Buynov, 55 years old, already knew the area well. His father had moved the family to the region while he was helping to build the Baikal-Amur railway in east Siberia in the 1970s. The younger Mr. Buynov attended the village school, spending his free time ice fishing, before heading to university in St. Petersburg.

By 1991, the Soviet Union had collapsed and Mr. Buynov returned to the area hoping to set up a business selling lumber and oil products.

“For some, east Siberia is just a cold place,” he says. “But for me it’s home.”

By 2001, the oil fields he bought with his father were producing, but there was no infrastructure in the remote region. Mr. Buynov had to truck the oil out on temporary, winter roads laid over frozen ground.

“We spent money like crazy, but nothing was working because there was no infrastructure, no market, no specialists there,” he says. Then he got lucky. He bought some old pipe from army supplies left behind after units serving in the Russian Far East were demobilized. He and his dad designed and built out a 124-mile pipeline to a rail terminal.

“We were young and enthusiastic,” says Mr. Buynov, who sold oil products during the week to earn money for the business and travelled north to work on the pipeline on weekends.

Today, the company is increasing production. He forecasts Irkutsk will lift output by 50% over last year to average 120,000 barrels a day. His fields are connected to the major oil pipeline to China. He’s been inspired by U.S. shale producers to use new techniques like horizontal drilling and hydraulic fracturing.

His story is similar to small Russian producers across the country. Last year, these smaller firms increased their output by 11% to just over 1 million barrels a day, helping elevate Russian oil production to a post-Soviet high of 10.58 million barrels a day, according to the Energy Ministry.

But those extra Russian barrels are flowing into a market already flooded with U.S. shale oil and contribute to an oil price crash that is now wreaking havoc on oil company budgets from Houston to Moscow.

That’s not deterring him.

“I want to put east Siberia on the map as an oil producing region,” he says, adding: “There’s no time to stop and be proud. We just have to get on with our work.”

— Selina Williams

Oil Production
in barrels per day

Break-Even Oil Price
is the per-barrel price required to profitably pump oil over the long term.
The Brent crude price was last updated on

Jedda, Saudi Arabia

Mohammad al-Sabban, adviser to the Saudi Arabian petroleum ministry, in London in May.
Photo: JASON ALDEN FOR THE WALL STREET JOURNAL

Mohammad al-Sabban

Mohammad al-Sabban has made a career ensuring an eager market for Saudi Arabia’s oil.

Mr. Sabban attended the second annual Conference of the Parties of the United Nations Framework Convention on Climate Change in July 1996 in Geneva, Switzerland.
Photo: United Nations

One of his proudest achievements, he says, was watering down language in a planned communique from a Group of Eight energy-ministers’ meeting in Rome a decade ago. The draft advised the club of wealthy countries to cut its dependence on fossil fuel. At the time, oil markets were straining amid big supply disruptions and soaring demand. World capitals were calling for more Saudi oil, not less.

“These specific countries are telling us to increase our production capacity,” says Mr. Sabban, a long-time economist at the Saudi oil ministry. “And at the same time you are pushing your member countries to reduce dependency on our oil.”

In the late 1990s, and again amid the global economic crisis in 2008, Mr. Sabban said he was crucial in guiding Riyadh oil policy—advising big cuts in production to bolster prices.

This time, things are different, he says. Saudi Arabia shocked the oil world when it convinced its fellow OPEC members late last year to keep pumping, despite the steep oil-price drop. Instead of throttling back again, Saudi Arabia has opened the taps wider, to keep its customers amid new competition—chief among them, U.S. shale producers.

"The current Saudi policy is trying to protect its market share in the wake of increasing production of conventional and shale oil” outside the cartel, he says.

Mr. Sabban, 60 years old, stepped down from his official role as senior economic adviser at the oil ministry in 2013, but he says he continues to act as an adviser to Oil Minister Ali Al-Naimi. He now runs his own consulting group in Jeddah, and also write for local Saudi papers, and is treated by some Arab and international media somewhat like a mouthpiece for the oil ministry at a time when Mr. Naimi’s own words can roil markets.

The Saudi Ministry of Petroleum & Mineral Resources downplays Mr. Sabban’s involvement, saying that his statements and writings “represent only his personal point of view and do not … reflect the Kingdom’s official position on petroleum issues.” The ministry further said that Mr. Sabban wasn’t on the “specialized economic team assigned to study … the Kingdom’s foreign petroleum policy” and “did not put forward ideas and recommendations on it.”

Mr. Sabban says Saudi thinking this time around is heavily influenced by another crash in prices—in the 1980s, just before Mr. Sabban started at the ministry. New crude output from Alaska and the North Sea had flooded markets. OPEC did what it had done in the past—it slashed output. Saudi Arabia, OPEC’s biggest producer, cut the sharpest, from more than 10 million barrels a day in 1980 to around 3.8 million in 1985.

But other OPEC members didn’t cut as much as they had promised, and non-OPEC supply grew sharply. Saudi Arabia lost customers. The kingdom's share of global oil exports fell dramatically, from 21% in the early 1980s to less than 9% in 1985. The lesson has weighed heavily on today’s oil ministry cadre, including Messrs. Sabban and Naimi.

Amid today’s price fall, the kingdom has raised its crude output to a record high of 10.3 million barrels a day, as of March. Saudi Arabia and OPEC are “trying to minimize the loss in oil revenues by increasing production," Mr. Sabban said.

The ministry disputes Mr. Sabban’s claim. “The rise in the Kingdom’s production over the past three months is a result of the oil market conditions, specifically increased global demand and the needs of the Kingdom’s permanent clients,” the ministry said in response to the publication of this article. “It is not designed to compensate for lower prices… since this negatively affects the Kingdom’s interests and OPEC and runs counter to economic logic.”

This article has been updated on June 9 to include comments from the Saudi Ministry of Petroleum & Mineral Resources, as well as to add attribution to several statements. In addition, the spelling of Mohammad al-Sabban’s surname was incorrectly spelled as al-Sabbah in the first reference to him.

— Summer Said

Oil Production
in barrels per day

Break-Even Oil Price
is the per-barrel price required to profitably pump oil over the long term.
The Brent crude price was last updated on

Dallas

Gary C. Evans, chairman and CEO of Magnum Hunter Resources Corp., at the company's new headquarters in Irving, Texas, in May.
Photo: Brandon Thibodeaux for The Wall Street Journal

Gary C. Evans

The U.S. oil and gas industry was in one of its worst slumps in 1985, when Gary C. Evans, a 27-year-old banker in Dallas, used $1,000 to start his first energy company. His mom handled the books, Mr. Evans says. “Nobody better to watch your money than your mother.”

That was two companies and four oil-price plunges ago. Today, Mr. Evans runs Magnum Hunter Resources Corp., a Dallas-based energy company with a stock market capitalization of $350 million, less than a quarter of its market cap 12 months ago, before oil and gas prices tumbled.

Mr. Evans concedes that the flock of independent energy companies like his are to some degree victims of their own success – their prowess at horizontal drilling and hydraulic fracturing in the dense rock formations of Texas, Pennsylvania and North Dakota have contributed to a global oversupply of crude. Mr. Evans, 58, also blames Saudi Arabia, the de facto leader of OPEC. The cartel hasn’t throttled back on production, as it has in previous bouts of oil-price weakness.

“I don’t think there’s any question their goal was to cripple our industry,” Mr. Evans said. “They are trying to regain market share. I think the mistake they are making is how resilient our industry is, how we learn to adapt quickly.”

Mr. Evans says his company, which has been moving toward natural-gas production instead of oil, will ride out the downturn by waiting for drilling costs to come down before fracking any new wells. If services costs come continue to fall, the company could begin ramping back up in the second half of this year.

If “you know a sale’s coming at Neiman Marcus, don’t you wait?” he asked. “OK, well we’re in the same boat. Why spend $10 today when I can spend $4 next month?”

Still, he’s not sure when the U.S. energy industry will rebound. “Everybody is watching their pennies a lot closer,” he says. “We will come out of this better, but we are taking a beating.”

— Erin Ailworth

Oil Production
in barrels per day

Break-Even Oil Price
is the per-barrel price required to profitably pump oil over the long term.
The Brent crude price was last updated on

Tangshan, China

Yin Shenping, CEO of Recon Technology, at Jidong oil field in Shandong province, China, in May.
Photo: JAMES WASSERMAN FOR THE WALL STREET JOURNAL

Yin Shenping

Chinese oilman Yin Shenping is on a mission: to help the nation’s aging and inefficient oil fields pump more with less.

Less than a decade ago, hundreds of Chinese oilfield workers supervised the equipment at Jidong, a midsized field controlled by state-controlled PetroChina, in China’s east. Today, the oil giant needs just a few dozen staff to monitor data collected in the field and sent to a control room here overlooking China’s Bohai Bay.

“The cost of China’s labor force is rising, and listed oil companies are focusing on boosting their efficiencies,” said Mr. Yin, chief executive of Nasdaq-listed Recon Technology Ltd., whose gear here keeps tabs on oil derricks in the field below.

Mr. Yin, 45 years old, didn’t take the usual path to a top job in China’s oil industry—by studying engineering at the nation’s petroleum universities and then joining a state-owned oil company. Instead, Mr. Yin studied information systems, working at several other technology companies before founding Recon with two others in 2007. The company went public in 2009.

Whether Mr. Yin and other entrepreneurs succeed at upgrading China’s oil fields is a big question hanging over global oil markets. China is the world’s largest net importer of oil, and will soon overtake the U.S. as the top importer in absolute terms. But it’s also the world’s fourth-largest oil producer. The U.S. Energy Information Administration estimates China’s production of petroleum could rise to 5.5 million barrels per day by 2030.

Output has been roughly flat in recent years, amid China’s large but ageing fields. It falls to Mr. Yin and other oil-service veterans to help China squeeze out more from their fields.

That’s especially important at a time of relative retrenchment inside China’s vast, state-run oil industry. The oil-price rout has pressured China’s once free-spending behemoths to cut costs. Government planners have even considered merging some of its giant energy firms. Mr. Yin says he’s banking that the shakeup will force the oil giants to open more of their business to private contractors like his.

Recon is also aiming to help bring its automation technology to China’s burgeoning shale sector, for example seeking work with growing Sinopec Corp. operations in Sichuan province.

“Efficiencies can easily be raised by 20-30%,” Mr. Yin said of China’s oilfields, adding: “It’s all a part of China’s transformation.”

— Brian Spegele

Oil Production
in barrels per day

Break-Even Oil Price
is the per-barrel price required to profitably pump oil over the long term.
The Brent crude price was last updated on

Calgary, Alberta

Scott Saxberg, president, CEO and a director of Crescent Point Energy, at his company’s offices in Calgary, Alberta, in May.
Photo: CHRIS BOLIN FOR THE WALL STREET JOURNAL

Scott Saxberg

He grew up playing hockey in Winnipeg, Manitoba; graduated from the university there, with a degree in mechanical engineering; and then headed west—first to Regina, Saskatchewan, and then Calgary, Alberta, Canada’s energy capital. After working at a number of small Canadian energy firms, in 2001 he publicly listed shares of his own acquisition-hungry exploration and production company, named after the road to his family’s cottage on Lake Superior.

“Our strategy was to buy oil [production], which was kind of being kicked to the way side” by others in favor of then-more lucrative natural gas leases, he said.

Crescent Point’s IPO took place at the start of what turned out to be more than a decade of mostly high and rising oil prices. Buoyed by the boom, Mr. Saxberg, now 46, embarked on a series of deal making—buying up acreage in western Canada. In 2006 alone, Mr. Saxberg completed more than 10 deals. The next year, he signed a $628-million deal that put him in the center of one of North America’s most productive shale-oil reservoirs.

The company is now one of Canada’s biggest shale producers, pumping about 150,000 barrels a day. It controls the most productive leases in the Canadian Bakken, which runs along the North Dakota border in southern Saskatchewan into eastern Manitoba. Last week [May 26], it bought Legacy Oil + Gas Inc. for 563 million Canadian dollars ($457 million), adding to its Bakken acreage.

That’s just a drop of the 3.75 million barrels a day Canadian producers pump overall. But like producers big and small, his company is boosting output—instead of scaling back—even amid today’s low prices. Canadian giant oil-sands producers have sunk huge investments into multi-decade drilling and mining operations. Mr. Saxberg has eschewed that for cheaper and more nimble operations. Like small producers on both sides of the border, his company is coping with lower prices by moving rigs to the most productive wells and squeezing out new efficiencies to save costs. He’s also looking for the next deal.

“A downturn like this really gives us an extra opportunity,” he says.

Mr. Saxberg has dipped south across the border, buying up acreage in North Dakota and more recently in Utah’s emerging Uinta basin.

“Utah felt a lot like Saskatchewan, sort of unloved, but more personable and not as highly sought after” by competitors, Mr. Saxberg said. Crescent Point’s next target may be the shale oil-rich DJ Basin in eastern Colorado, where Mr. Saxberg says he’s looking for deals. “That’s one area we’re looking to expand into,” he said. “We’ll start small and grow like we’ve done in other areas.”

— Chester Dawson

Oil Production
in barrels per day

Break-Even Oil Price
is the per-barrel price required to profitably pump oil over the long term.
The Brent crude price was last updated on

Baghdad, Iraq

Adnan al-Janabi, right, a member of Iraqi constitutional drafting committee, speaks during a news conference in Baghdad in August 2005.
Photo: CEERWAN AZIZ/REUTERS

Adnan al-Janabi

Adnan al-Janabi keeps a copy of the arrest warrant issued for him during the chaotic years following the U.S.-led invasion of Iraq. He was chair of the oil and energy committee in the country’s new parliament at the time, working on legislation to help spur foreign investment in Iraqi oil fields.

The arrest warrant for Mr. al-Janabi
Photo: PROVIDED BY MR. AL-JANABI

Mr. al-Janabi, says the warrant was politically motivated.

It was just one of the challenges the veteran oil man and politician said he faced in his efforts to shape a legal framework for Iraq’s vast oil sector. After the fall of Saddam Hussein in 2003, sectarian tensions boiled over between Sunni Muslims, who had benefited under Hussein, and Shiites, who Hussein oppressed, but who then largely took over Iraq after his fall. The oil legislation fizzled amid infighting. What went wrong?

“Almost everything,” Mr. Janabi says.

His career path charts the rise and fall--and recent rebirth--of Iraq’s storied oil industry. Today, he offers a simple explanation for why Baghdad isn’t willing to throttle back on production, even as a global glut has tanked prices. Baghdad needs money, and with oil prices low, Iraq need to pump even more to cushion the blow.

“What we have started to do is to compensate by increasing production, the reverse of what some people are calling for,” he says.

Armed with a British degree in petroleum technology, he climbed the corporate ladder at Iraq’s state oil company, and then served a stint representing Iraq in OPEC. He remembers it as a time when the cartel was still “really big”--its power to affect oil prices unquestioned.

A Sunni, he first served in parliament in the 1990s during Hussein’s dictatorship after he became sheikh, or leader, of one of Iraq’s influential tribes. He’s critical of the Baathist regime, and remained in politics after its fall. He’s spent the last decade wrangling in Iraq’s parliament over legislation that would govern the country’s vast oil sector.

Still lacking a clear legal framework, Iraq has nonetheless invited in many of the world’s biggest energy companies. They have helped it pump more oil today than it has since its petroleum golden age more than three decades ago. Iraq produced 3.8 million barrels a day in April, its highest output since 1979. Amid today’s oil glut, Mr. Janabi says Baghdad isn’t about to throttle back—even as some fellow OPEC members say overproduction is helping keep prices low.

“As an Iraqi, I couldn’t care less,” he says. “The interest of Iraq is to earn revenues, and we can earn more by increasing production.”

— Sarah Kent

Oil Production
in barrels per day

Break-Even Oil Price
is the per-barrel price required to profitably pump oil over the long term.
The Brent crude price was last updated on